UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 17, 1996
----------------------
(September 17, 1996)
Bradlees, Inc.
--------------
(Exact Name of Registrant As Specified In Its Charter)
Massachusetts
-------------
(State Or Other Jurisdiction of Incorporation)
1-11134 04-3156108
------- ----------
(Commission File Number) (IRS Employer Identification No.)
One Bradlees Circle; Braintree, Massachusetts
02184
- ---------------------------------------------
(Address Of Principal Executive Offices)
(Zip Code)
(617) 380-3000
--------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name or former address, if changed since last
report)
Exhibit Index on Page 4
Page 1 of 10 (Including Exhibits)
<PAGE>
Item 5: OTHER EVENTS
------------
Beginning on September 17, 1996, Bradlees, Inc. (the "Company")
will distribute to its banks and other credit providers
summaries of its unaudited financial results for the thirteen
and twenty-six weeks ended August 3, 1996, including a
comparison to the Company's summary financial plan (the "Plan")
for the fiscal year ending February 1, 1997 ("Fiscal 1996")
filed on Form 8-K dated March 29, 1996, and summaries of its
revised financial plan (the "Revised Plan") for the second half
of Fiscal 1996. The Fiscal 1996 second quarter and first half
results and the Revised Plan are attached hereto as Exhibits 20A
and 20B, respectively.
Effective October 28, 1995, the Company completed the conversion
of its financial systems and changed its quarterly financial
calendar to conform to the common retail presentation of 13 week
("4-5-4") quarters. Last year's amounts for the first and
second quarters were restated accordingly.
Total sales for the 13 weeks (second quarter) and 26 weeks
(year-to-date) ended August 3, 1996 were $43.8 and $96.6 million
below Plan, respectively, primarily due to the difficulties in
promptly offsetting sales losses from discontinued merchandise
categories and the weak retail market, particularly for apparel.
EBITDA (as defined in the exhibits) for the same periods was
$28.4 and $31.0 million below Plan, respectively, primarily due
to the lower sales and associated gross margin shortfall and the
lower gross margin rate in the second quarter. The
lower-than-planned gross margin rate in the second quarter was
due primarily to higher-than-planned markdowns and a $5.9
million markdown provision (excluded from EBITDA) associated
with 14 closing stores' going-out-of-business (GOB) sales.
Reorganization items in the second quarter that were not in the
Plan included charges such as asset and liability writeoffs and
an estimated provision for rejected leases associated with the
14 stores closing in the third quarter.
As of August 3, 1996, total cash and cash equivalents were $.5 million
above Plan, primarily due to below-Plan capital spending and
higher-than-planned accounts payable, offset by higher levels of
cash used in operations. Accounts payable was $18.5 million above
Plan at August 3, 1996, due primarily to continued vendor terms
support. Inventory levels were $1.0 million below Plan at
August 3, 1996.
Certain revisions have been made to the Plan with a net decrease
of $12 million in annual Fiscal 1996 EBITDA after restructuring
payments. EBITDA prior to restructuring payments for Fiscal 1996
is planned at a breakeven level. The revisions to the Plan for the
second half of Fiscal 1996 include adjustments for the impact of the
14 stores closing in the third quarter, a half-point increase in the
gross margin rate, $22 million in SG&A expense reductions (exclusive
of store closings), seasonal borrowings of up to $52 million, and a
$10 million reduction in planned capital spending. The majority
of the Company's new merchandising, advertising and operational
strategies are in place for the second half and are reflected
in the planned improvements in operating results. The Revised
Plan incorporates the actual results for the first half of Fiscal 1996.
2
The Company is distributing the quarterly performance against
its Plan (the "Plan Performance Information") as well as the
Revised Plan to its banks and other credit providers to
facilitate their credit analyses. The Plan
Performance Information and the Revised Plan SHOULD NOT BE
RELIED UPON FOR
ANY OTHER PURPOSE and should be read in conjunction with the
Company's Form
8-K dated March 29, 1996, Form 10-Q for the first and second
quarters ended May 4, 1996 and August 3, 1996 and Form 10-K for
the fiscal year ended February 3, 1996 (fiscal 1995). The Plan
Performance Information and the Revised Plan are being reported
publicly solely because they are being distributed to a large
number of the Company's vendors for purposes of their credit
analyses. Although the Company is publicly disclosing the Plan
Performance Information and Revised Plan, the Company does not
believe it is obligated to provide such information
indefinitely, and the Company may cease making such disclosures
and updates at any time. The Plan Performance Information and
Revised Plan were not examined, reviewed or compiled by the
Company's independent public accountants. The Company is not
obligated to update the Plan Performance Information or the
Revised Plan to reflect subsequent events or developments. The
Plan Performance Information and Revised Plan are subject to
future adjustments, if any, that could materially affect such
information.
The Revised Plan was not prepared with a view toward compliance
with the guidelines established by the American Institute of
Certified Public Accountants or the rules and regulations of the
Securities and Exchange Commission regarding financial
projections. While presented with numerical specificity, the
Revised Plan contains forward looking statements which are based
upon a variety of assumptions (including assumptions concerning
the success of the Company's new merchandising, advertising and
operational strategies and the related effects on sales and
gross margin and the achievement of expected expense reductions)
that may not be realized and are subject to significant
business, economic and competitive uncertainties and potential
contingencies, many of which are beyond the Company's control.
Consequently, the Revised Plan should not be regarded as a
representation or warranty by the Company, or any other person,
that the projections contained therein will be realized. Actual
results may vary materially from those presented in the Revised
Plan.
Item 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
- -----------------------------------------------------------------
- -
Exhibit: 20A Financial Summary Results for the
13 and 26 Weeks Ended August 3, 1996
20B Fiscal 1996 Second Half Revised
Summary Financial Plan
3
INDEX TO EXHIBITS
Exhibit No. Exhibit Page No.
- ----------- ------- --------
20A Financial Summary Results for the 6
13 and 26 Weeks Ended August 3, 1996
20B Fiscal 1996 Second Half Revised Summary 8
Financial Plan
4
BRADLEES, INC.
AND SUBSIDIARIES
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BRADLEES, INC.
Date: September 16, 1996 By /s/ MARK A. COHEN
-----------------
Mark A. Cohen
Chairman and
Chief Executive Officer
Date: September 16, 1996 By /s/ PETER THORNER
-----------------
Peter Thorner
President, Director and
Chief Operating Officer
Date: September 16, 1996 By /s/ CORNELIUS F. MOSES III
------------------------
Cornelius F. Moses III
Senior Vice President,
Chief Financial Officer
5
BRADLEES, INC.
Exhibit 20A
SECOND QUARTER RESULTS VS. PLAN
Page 1 of 2
(Unaudited)
(In Millions)
Second Quarter 1996 Year-to-Date 1996
Actual Plan* Last Year Actual Plan* Last Year
------ ----- --------- ------ ----- ---------
INCOME SUMMARY:
- ---------------
Owned Sales $367.3 $411.5 $419.0 $702.9 $798.8 $796.3
Food Service Sales 2.3 2.9 2.5 4.4 4.8 4.7
Leased Department Sales 16.6 15.6 16.0 28.8 29.1 28.9
------ ------ ------ ------- ------ ------
Total Sales 386.2 430.0 437.5 736.1 832.7 829.9
Gross Margin $ 107.3 134.7 124.5 209.8 244.8 224.0
Non-Recurring GOB
reserve (5.9) - - (5.9) - -
------ ------ ------ ------- ------ ------
Adjusted Gross Margin 101.4 134.7 124.5 203.9 244.8 224.0
Gross Margin % (based on
owned sales) 27.6% 32.7% 29.7% 29.0% 30.6% 28.1%
SG&A Expenses (134.0) (134.2) (143.3) (272.0)(276.1) (278.0)
Cash Impact from
Restructuring (2.0) (0.7) - (4.6) (4.6) -
Other Income 3.6 3.5 3.7 6.4 6.5 7.0
Add back Non-Recurring
GOB Reserve 5.9 - - 5.9 - -
------ ------ ------ ------- ------ ------
EBITDA (25.1) 3.3 (15.1) (60.4)(29.4) (47.0)
------ ------ ------ ------- ------ ------
Add back Cash Impact
from Restructuring 2.0 0.7 - 4.6 4.6 -
Less Non-Recurring GOB
Reserve (5.9) - - (5.9) - -
Depreciation &
Amortization (10.4) (10.6) (13.2) (21.5)(21.1) (26.4)
Interest Expense (2.5) (2.4) (7.1) (4.9) (4.8) (16.9)
Reorganization Items (40.9) (3.3) (8.0) (48.4) (9.7) (8.0)
Income Tax Benefit - - 15.8 - - 38.3
------ ------ ------ ------- ------ ------
Net Loss $(82.8) $(12.3) $(27.6) $(136.5)$(60.4) $(60.0)
====== ====== ====== ======= ====== ======
6
BRADLEES, INC.
Exhibit 20A
SECOND QUARTER RESULTS VS. PLAN
Page 1 of 2
(Unaudited)
(Continued)
(In Millions)
BALANCE SHEET SUMMARY: Balance at End of Period
- ---------------------- ------------------------
Actual Plan* Last Yr
Unrestricted Cash and
Cash Equivalents $17.3 $23.0 $100.1
Restricted Cash and
Cash Equivalents 7.4 1.2 7.0
Inventories 256.4 257.4 274.2
Other Current Assets 32.3 27.3 60.0
------ ----- ------
Total Current Assets 313.4 308.9 441.3
Net Fixed Assets 175.7 215.8 278.0
Long Term Assets 196.0 186.0 239.6
------ ------ ------
Total Assets $685.1 $710.7 $958.9
====== ====== ======
Accounts Payable $147.2 $128.7 $102.3
Current Liabilities 68.5 59.4 48.0
------ ------ ------
Total Current Liabilities 215.7 188.1 150.3
Long-Term Liabilities 80.7 90.0 190.2
Liabilities Subject to Settlement 570.0 538.0 516.1
Paid-In-Capital 137.0 136.8 136.6
Accumulated Deficit (318.3)(242.2) (34.3)
------ ------ ------
Total Stockholders'
Equity (Deficiency) (181.3)(105.4) 102.3
------ ------ ------
Total Liabilities and
Stockholders' Equity (Deficiency) $685.1 $710.7 $958.9
====== ====== ======
* As filed on Form 8-K dated March 29, 1996.
NOTE: EBITDA is earnings (loss) before interest expense, income
taxes, non-cash restructuring and non-recurring items, asset
impairment charge, reorganization
and extraordinary items, and depreciation and amortization. At
the time
cash is received or expended for restructuring and non-recurring
items, the cash amount is included in the calculation of EDITDA.
7
BRADLEES, INC.
Exhibit 20A
SECOND QUARTER RESULTS VS. PLAN
Page 2 of 2
(Unaudited)
(In Millions)
Second Quarter 1996 YTD 1996
-------------------- ---------------
Actual Plan * Actual Plan *
------ ------ ------ ------
CASH FLOW SUMMARY:
- ------------------
Beginning Unrestricted Cash
& Cash Equivalents $4.9 $3.0 $63.0 $63.0
Cash Provided by (Used in)
Operations:
Net Loss (82.8) (12.3) (136.5) (60.4)
Depreciation & Amortization 10.4 10.5 21.5 21.1
Other, Including Reorganization
Items 39.6 0.4 40.1 0.8
Changes in Working Capital:
Inventory Decrease 44.0 30.5 25.9 24.8
Accounts Payable Increase
(Decrease) 9.9 (15.2) (1.7) (20.1)
All Other (1.2) 20.7 24.3 22.5
----- ----- ----- -----
Net Cash Provided by (Used in)
Operations** 19.9 34.6 (26.4) (11.3)
Capital Spending (5.5) (13.1) (9.4) (25.6)
Increase in Restricted Cash
and Cash Equivalents (0.2) - (6.2) -
Other:
Payments of Capital Leases
& Other (0.6) (0.6) (1.3) (1.3)
Payments of Liabilities Subject
to Settlement (1.2) (0.9) (2.1) (1.8)
Deferred Financing Costs - - (0.3) -
----- ----- ----- -----
Total Other (1.8) (1.5) (3.7) (3.1)
----- ----- ----- -----
Increase (Decrease) in Unrestricted
Cash and Cash Equivalents 12.4 20.0 (45.7) (40.0)
----- ----- ----- -----
Ending Unrestricted Cash and
Cash Equivalents $17.3 $23.0 $17.3 $23.0
===== ===== ===== =====
* As filed on Form 8-K dated March 29, 1996.
** Includes cash outlays associated with reorganization items.
8
BRADLEES, INC.
Exhibit 20B
CONDENSED INCOME STATEMENT
Page 1 of 3
MANAGEMENT FORMAT
(In Millions)
1996 SECOND HALF REVISED SUMMARY FINANCIAL PLAN
-----------------------------------------------
FIRST QTR 3 QTR 4 PROJECTED
HALF REVISED REVISED
ACTUALS PLAN PLAN ANNUAL
------- ------- ------- ---------
INCOME SUMMARY:
Owned Sales $702.9 $413.3 $517.5 $1,633.7
Food Service Sales 4.4 2.0 2.5 8.9
Leased Department Sales 28.8 13.4 16.0 58.2
------ ------ ------ --------
Total Sales 736.1 428.7 536.0 1,700.8
Gross Margin $ 209.8 123.6 163.6 497.0
Non-recurring GOB Reserve (5.9) - - (5.9)
------ ------ ------ --------
Adjusted Gross Margin 203.9 123.6 163.6 491.1
Gross Margin % (based on
owned sales)* 29.8% 29.9% 31.6% 30.4%
SG&A Expenses (272.0) (122.4) (118.8) (513.2)
Other Income 6.4 2.9 3.5 12.9
Add Back Non-recurring GOB
Reserve 5.9 - - 5.9
Gain on Disposition of
Properties - 1.5 2.0 3.5
------ ------ ------ --------
EBITDA before Restructuring (55.8) 5.6 50.3 0.2
------ ------ ------ --------
Cash Impact from
Restructuring (4.6) (5.3) (1.7) (11.7)
------ ------ ------ --------
EBITDA after Restructuring (60.4) 0.3 48.6 (11.5)
------ ------ ------ --------
Add back Cash Impact from
Restructuring 4.6 5.4 1.7 11.7
Less Non-Recurring GOB Reserve (5.9) - - (5.9)
Depreciation & Amortization (21.5) (10.6) (9.9) (42.0)
Interest Expense (4.9) (3.2) (2.9) (11.0)
Reorganization Items (48.4) (7.8) (1.3) (57.5)
------ ------ ------ --------
Net Income (Loss) $(136.5) $(15.9) $ 36.2 $ (116.2)
======= ====== ====== ========
* Calculated prior to non-recurring GOB reserve.
NOTE: EBITDA is earnings (loss) before interest expense, income
taxes,
non-cash restructuring and non-recurring items, asset
impairment charge,
reorganization and extraordinary items, and depreciation and
amortization.
At the time cash is received or expended for restructuring and
non-recurring
items, the cash amount is included in the calculation of EDITDA.
9
BRADLEES, INC.
EXHIBIT 20B
CONDENSED BALANCE SHEET
Page 2 of 3
MANAGEMENT FORMAT
(in millions)
FISCAL 1996 SECOND HALF REVISED SUMMARY FINANCIAL PLAN
------------------------------------------------------
QTR3 QTR4
------ ------
Assets
- ------
Current Assets:
Unrestricted cash & cash equivalents $3.0 $37.4
Restricted cash & cash equivalents 8.9 9.0
Inventories 336.1 247.9
Other current assets 34.8 24.5
------ ------
Total Current Assets 382.8 318.8
Net Fixed Assets 180.2 179.7
Long Term Assets 193.4 190.8
------ ------
Total Assets $756.4 $689.3
====== ======
Liabilities
- -----------
Current Liabilities:
Accounts payable $184.9 $136.3
Other current liabilities 119.5 70.1
------ ------
Total Current Liabilities 304.4 206.4
Liabilities subject to settlement 568.9 566.3
Long-term capital lease obligations 47.7 47.2
Other long-term liabilities 32.6 30.4
------ ------
Total Liabilities 953.6 850.3
Stockholders' Deficit
- ---------------------
Common stock 137.0 137.0
Accumulated deficit (334.2) (298.0)
------ ------
Total Stockholders' Deficit (197.2) (161.0)
------ ------
Total Liabilities & Deficit $756.4 $689.3
====== ======
10
BRADLEES, INC.
EXHIBIT 20B
CONDENSED CASH FLOW
Page 3 of 3
MANAGEMENT FORMAT
(in millions)
FISCAL 1996 SECOND HALF REVISED
SUMMARY FINANCIAL PLAN
--------------------------------
FIRST HALF PROJECTED
ACTUALS QTR3 QTR4 ANNUAL
---------- ---- ---- ---------
Beginning unrestricted cash &
cash equivalents $63.0 $17.3 $3.0 $63.0
Cash provided by (used in)
operations:
Net income (loss) (136.5) (15.9) 36.2 (116.2)
Depreciation & amortization 21.5 10.6 9.9 42.0
Other (including
reorganization items) 40.1 3.4 (0.3) 43.2
Changes in working capital:
Inventory (increase) decrease 25.9 (79.7) 88.3 34.4
Accounts payable increase
(decrease) (1.7) 37.6 (48.5) (12.5)
All other 24.3 (5.8) 9.8 28.3
----- ----- ----- -----
Net cash provided by (used in)
operations* (26.4) (49.8) 95.4 19.2
Capital spending (9.4) (13.1) (7.5) (30.0)
Increase in restricted cash and
cash equivalents (6.2) (1.5) (0.2) (7.8)
Other
Payments of capital leases &
other (1.3) (0.5) (0.7) (2.5)
Payments of liabilities subject
to settlement (2.1) (1.0) (1.0) (4.2)
Deferred financing costs (0.3) 0.0 0.0 (0.3)
Borrowings (payments) under the
DIP Facility 0.0 51.6 (51.6) 0.0
----- ----- ----- -----
Total other (3.7) 50.1 (53.3) (7.0)
Incr. (decr.) in unrestricted
cash & cash equivalent (45.7) (14.3) 34.4 (25.6)
----- ----- ----- -----
Ending unrestricted cash & cash
equivalents $17.3 $3.0 $37.4 $37.4
===== ====== ===== =====
* Includes cash outlays associated with reorganization items.
11
